[Free-sklyarov-uk] Microsoft EULA

[Chris Lightfoot]

On Wed, Jul 03, 2002 at 12:22:24PM +0100, Peter Clay wrote:
> On Mon, 1 Jul 2002, Chris Lightfoot wrote:
> 
> > ($40bn, plus another $1bn/month.) That's hard to fake.
> 
> However, I read an interesting article in the Economist about how
> companies like Microsoft use stock options to inflate their earnings per
> share. Basically, if you give your employees $100 million in salary that
> has to be deducted from your income when the earnings per share is
> calculated. But if you give them stock options worth $100 million, you
> don't.
> 
> Apparantly this works fine for a company when its stock is rising. If its
> stock ever starts falling by a signifigant amount, the stock options go
> underwater and become worthless, so employees stop accepting them as
> pay. This forces the company to pay them in real money, further reducing
> the earnings per share and hence the value of the stock.

The latter, of course, was very troublesome for Netscape.

Yep. I'm no great expert on this stuff, but I believe they
also buy back stock from shareholders, which enables them
to eliminate their profits (so that they don't pay tax on
them) and increase the value of the shares, without paying
a dividend (on which the shareholders would have to pay
income tax rather than capital gains).

-- 
Midget psychic escapes prison: small medium at large